and by themselves the great and urgent works to which our vitality calls us. Our territory, because of its extent and wealth, requires a population very much superior to that which we at present possess. But immigration should be encouraged according to carefully thought-out and prescribed conditions. Immigration ceases to be a good institution if it is not selective and, if it is not restricted within certain limits recommended to us by the example of other countries. The Government should avoid the introduction of vicious elements into an organism which is yet free from strikes and enemies of order. In this manner immigration will not become a germ or a suggestion of ideas contrary to the social order, but a factor immediately active on the production of prosperity and wealth. In spite of the small amount of the propaganda we have made abroad, immigration is coming to us in a very increasing rate. In fact, the immigrants, which in 1905 were not more than 293, increased to 1,221 in 1906, and it is encouraging to notice that in the first five months of the current year this immigration has exceeded 4,000 foreigners. * In order that these technical schools give good results, they should be installed in special buildings and be given over to teachers who may be contracted in a foreign country if they can not be found here. In the higher branches of education the necessity of giving the engineering school a special building is felt. Owing to the development which experimental instruction is acquiring daily, the said school does not find enough room within the walls of the university building. The Government will begin in the current year the construction of the new building as soon as the plans for it are finished. The board of public instruction, which, with laudable zeal, superintends the secondary and higher branches of instruction, is proceeding energetically with the improvement of national education and of pedagogical administration. On their suggestion several important measures have been taken to regularize said administration and others have been suggested which provide for a modification in the plans of study and the system of examinations. Facilities have been given to the instruction directed by private initiative, The normal schools in charge of private institutions can give official titles to their graduates providing they pass the regular examination which the State exacts of the students of the public normal schools. Measures have been taken to assure a correct and economical expenditure of the funds devoted to the payment of the rental of houses for schools, to the acquisition of the materials and supplies for schools, and, in one word, for the good administration of a service which, as that of education, is of special interest to the Government. The incomes of the nation during the last year went up to $161,089,725, an amount which, with the $2,445,660 left over at the end of 1905 and the $20,000,000 of the government paper money issue authorized by the law of the 23d of May, 1906, gives a total of $183,535,392. The total of expenditure reached $169,951,601, leaving a balance in favor of this year of $13,583,790. The considerable increase of the ordinary revenues, which exceeded the cal culated returns by more than seven millions, the noninvestment of considerable sums authorized by the budget or by special laws, and the fact that more than 5,000,000 pesos have been drawn and paid only this year for requisitions and other expenses growing out of the earthquake of August, are the causes that have produced this favorable balance. The public revenues of this year, taking as a basis the returns of the first quarter, are estimated at 177,000,000 pesos, and with this sum and the balance from last year it is calculated that the ordinary expenditures and those authorized by special laws will be met and that then there will remain for 1908 a balance of 6,000,000 pesos. All public works are being pushed forward with energy, and a reduction of unnecessary expenses has been made. *** The navy has not received any additions in this last period, and counts on the present date, with 11 ships in service, 5 disarmed, and the transports, bridges, and survey steamers necessary for the service. The national merchant marine has been increased by 34 ships, with a tonnage of more than 30,000 tons. At present it is composed of 85 steamers and 90 sailing ships, with more than 110,000 registered tonnage. Permission has been granted to establish three private floating docks, two in Talcahuano and one in Mejillones. PEDRO MONTT, CHINA. THE OPEN-DOOR POLICY IN MANCHURIA-ESTABLISHMENT OF CUSTOM-HOUSES AND OPENING OF PORTS TO INTERNATIONAL TRADE." (For previous correspondence see Foreign Relations, 1906, pp. 162 et seq.) File No. 551/46-47. No. 621.] Minister Rockhill to the Secretary of State. [Extracts.] AMERICAN LEGATION, SIR: On April 15 last the evacuation of Manchuria by the Russian and Japanese forces was completed, and it was understood that arrangements with China had already at that date been settled upon for the opening of customs-houses on the land frontier and at the seaports, so that international trade would at once be put on a normal basis, and that the arbitrary and very unsatisfactory conditions which have so prejudicially affected our commercial relations in this part of China since the termination of the Russo-Japanese war would promptly come to an end. The assurances to this effect given me repeatedly by the Russian and Japanese ministers were clear and emphatic; I was led to expect the opening of Chinese customs-houses at Dalny, Antung, Manchuli, and Suifen within a few days, certainly by May 1. On May 2 the Japanese minister told me that within a few days all arrangements would be completed for the opening of the Dalny customs and that they would be put in form at once, without awaiting action by Russia in the north. Notwithstanding this, I was informed on the 14th by the Waiwu Pu that it could not be foreseen when these negotiations could be completed. The day before yesterday I was told that the Japanese were delaying concluding the arrangements on account of the question of the carriage of Chinese mails by launches plying between Dalny and Chinese ports on the coast under the steam inland navigation regulations. When this matter is disposed of, it is greatly to be feared that other questions equally irrelevant will be brought up by the Japanese for purely dilatory purposes, and I concluded that I should report to you without further delay the highly unsatisfactory condition of affairs in Manchuria. I therefore sent you the following cablegram: MAY 16. Consul-general of the United States at Mukden reports conditions at Antung since the evacuation unchanged. Not possible to establish settlement. Opening of the customs Dalny may be delayed considerably. Russian customs arrangements for north Manchuria are dragging and unlikely to be perfected soon. Prospects of return to normal commercial conditions, Manchuria, this year very poor. a See also "Railroads in Manchuria," p. 776, and "Customs and Inland Taxation," p. 226. The delay the Russians are at present experiencing in concluding their arrangement with the Chinese for the opening of customshouses in the north turns on the interpretation of the provisions in treaties in force between Russia and China providing for the payment of reduced import duties (two-thirds of the maritime tariff) on goods entering China by land. The Russians contend that goods subJect to this reduced import duty can be transported to any point along the railway lines in Manchuria without being liable to further duty; the Chinese claim that the payment of two-thirds duty only entitles such goods to pass the Chinese frontier, and that they must pay transit dues (50 per cent additional) to clear them to points further in the country. The contention of the Russians is certainly correct, and it is approved by those of my colleagues who are interested in Manchurian commercial questions. It is in conformity with our own contention that foreign goods imported into Manchuria by sea should pass free of duty to any inland opened mart after having once paid full tariff import duties. It should be remembered that all the principal stations along the Manchurian railway lines, both in the south and in the north, are also open to international residence and trade. The Russian minister has informed me that he will insist on his interpretation of this point, regardless of the delay it may occasion. The British minister informed me to-day that he had already called his Government's attention to the dilatoriness of the Japanese in fulfilling their pledges, and that he proposed doing so again, notwithstanding the assurances given him within the last few days by the Japanese minister. I note in the recent report made by the imperial maritime customs on the trade of 1906 that in that year Japanese products valued at £2,600,000 were imported into Manchuria, of which only £300,000 worth passed through Niuchwang, where they were subject to import duty, the balance entering duty free. I have, etc., W. W. ROCKHILL. File No. 551/25b. The Secretary of State to Ambassador Riddle. [Telegram.-Paraphrase.] DEPARTMENT of State, (Directs Mr. Riddle discreetly to impress upon the minister for foreign affairs the interest felt by this Government in the reestablishment of normal conditions throughout Manchuria and the fact that the Government of the United States should greatly appreciate such action by the Government of Russia as would lead to the early establishment of Chinese custom-houses on the Russo-Chinese frontier. States that this step would have much effect in hastening the regularization of commercial conditions in southern Manchuria also, which should be welcome to Russia as well as to the United States.) File No. 551/28. Ambassador Riddle to the Secretary of State. [Telegram.-Paraphrase.] AMERICAN EMBASSY, (Reports that in compliance with telegraphic instructions he has communicated with the minister for foreign affairs on the subject of the establishment of Chinese custom-houses, and that the minister replied that the negotiations are very nearly completed at Peking, but the Chinese Government objects to four points, the most important of which is that relating to the 50 versts free zone.) File No. 551/33-34. No. 44.] Ambassador Riddle to the Secretary of State. AMERICAN EMBASSY, St. Petersburg, June 1, 1907. SIR: I have the honor to confirm your telegram received on May 25 and my reply of May 30, copies of which are hereto attached. May 29 was the first day on which I was able to see the minister for foreign affairs, and in the course of a conversation with him I expressed the great interest which the United States felt in having normal conditions restored in Manchuria and that the United States Government would highly appreciate any action on the part of the Russian Government which would hasten the establishment of Chinese custom-houses on the Russo-Chinese frontier. The minister replied that he fully realized the natural interest which the United States felt in this question on account of our important commercial relations and that the Russian Government was also anxious that custom-houses should be established as soon as possible. He added that negotiations were being carried on at Peking, that they were nearly completed, and that the only hitch was caused by the Chinese Government objecting to four minor points, relating, respectively, to the proposed free zone of 50 versts and to the contracts governing the Chinese Eastern Railway Company, although the Russian contention was in accordance with existing treaties and contracts and was upheld by Sir Robert Hart, director-general of Chinese customs. I have, etc., File No. 551/51-52. No. 633.] J. W. RIDDLE. Minister Rockhill to the Secretary of State. AMERICAN LEGATION, SIR: In continuation of my No. 627, of May 30, I have now the honor to transmit herewith copies of the agreement signed on that date by the Japanese minister and the inspector-general of imperial a Not printed. maritime customs, together with its two annexes, providing (1) for the establishment of a maritime customs office at Dairen and (2) inland waters steam navigation rules for Dairen and the leased territory in the Liaotung Peninsula. The first annex is very nearly identical with the agreement signed by the German minister and the inspectorgeneral of customs on April 17, 1899, for the leased territory of Kiaochau; it is to be revised in the spring of 1908, when local conditions and needs are more fully ascertained. The second is for paragraphs 1, 2, 3, and 4, the same as the German agreement for Kiaochau signed April 7, 1904; paragraph 5 is slightly modified; and paragraphs 6 and 7 are not found in the German agreement. The substance of the above information was transmitted to you to-day in a telegram, which read as follows: Provisional customs arrangement for Dairen signed May 30 nearly identical German agreement April 17, 1899. Japanese minister says it will probably go into effect July 1. Revision next spring is provided for. I have, etc., ROCKHILL. W. W. ROCK HILL. [Inclosure.] Agreement concerning the establishment of a maritime customs office at Dairen and inland water steam navigation. The Governments of Japan and China having agreed to the establishment of an office of the Chinese imperial maritime customs at Dairen, the undersigned, duly authorized by their respective Governments, hereby agree to accept for the general guidance of that office, and as a preliminary and provisional measure, the detailed understanding set forth in the documents hereto attached, viz: A. Agreement about the establishment of a maritime customs office at Dairen; and B. Inland waters steam navigation. And it is further agreed that in the spring of next year, after the experience of one season, there shall be a reconsideration of the present arrangement in order to fuller accord with local conditions and needs, and that for the documents now accepted there shall be substituted a revised agreement, supplemented by an ordinance, the former to be prepared by the Japanese minister and the inspector-general of customs, and the latter by the Japanese authorities of the leased territory in communication with the commissioner of customs at Dairen. And it is further understood that the Japanese authorities will take steps to prevent smuggling from the leased territory into China and support the Chinese authorities in the measures they take to prevent smuggling from China into the leased territory, and also that a suitable procedure shall be arranged for dealing with railway traffic at the Dairen terminus and the frontier station (Wa Fang Tien or other) and temporary regulations made for collection of duties by the customs. G. HAYASHI, Minister of Japan. [SEAL.] ROBERT HART, Inspector-General of Customs. [SEAL.] Signed and sealed at Peking the 30th May, 1907. [Subinclosure A.] Agreement about the establishment of a maritime customs office at Dairen. 1. The commissioner or the chief of the maritime customs office at Dairen is to be of Japanese nationality. The inspector-general of customs will come to |